A Note from Shireen Hilal
People ask me all the time what trends I’m seeing in the legal market. It comes up in client conversations, on podcasts, and even in regular cocktail conversation.
I love writing these pieces because they force me to test what I think I’m seeing. Before I write them, I spend time asking law firm leaders and people around the industry what they’re noticing too, so the article isn’t just a list of predictions.
For 2026, the biggest theme is that the market many firms were built for doesn’t really exist anymore. Clients have more options, AI is changing how work gets done, traditional firm categories are blurring, and talent remains one of the biggest drivers of both growth and risk.
In the article, I focus on five trends that I think law firm leaders should be paying attention to:
- AI creating efficiency gains along with questions around governance, price, and client-facing value.
- Client pressure increasing around fees, value, speed, and senior-level judgment.
- Traditional categories blurring across BigLaw, midsized firms, boutiques, ALSPs, and legal tech.
- Talent getting more expensive while weak vetting, integration, and staffing make returns harder to capture.
- Operating models falling behind as work becomes faster, more tech-enabled, and less tied to traditional staffing assumptions.
The point of this report was to help leaders decide where to invest, what to fix before clients force the issue, and where the firm has a real opening to compete differently.
We help law firm leaders build stronger growth, profitability, and operating strategies, including how they respond to market shifts like AI adoption and client pressure. If you’re looking at your own strategy and trying to decide what your firm should prioritize, I’m happy to be a sounding board. Meanwhile, the full Law360 article is below.
As Published in Law360
The legal market heading into 2026 looks nothing like the one most firms were built for — and that gap is your opening.
Clients have more options than ever, and they're using them. Midsize firms are meaningfully competing against BigLaw, BigLaw firms are targeting work outside their historical core to fill the gap, and alternative legal service providers are delivering tech-enabled work at a fraction of the cost. Panels are shrinking. Scrutiny is rising. And legal departments want three things: value, speed and senior-level judgment — not armies of associates.
On the talent side, those same client preferences are reshaping where firms invest. The lateral partner market remains highly competitive as firms chase portable books and proven judgment, but too often without the vetting or integration discipline required to make those hires pay off.[1] At the same time, artificial intelligence is moving from pilot programs into production workflow, quietly changing how firms staff matters, price work and think about junior capacity.
Internally, that shift is already creating strain. AI is exposing the inefficiencies baked into traditional hourly billing as it unlocks new productivity. And hybrid teams spread across offices and time zones are fighting for cohesion and consistent execution. Firms are feeling pressure on two fronts at once: business models that no longer match how work is delivered, and operating models that haven't caught up to how teams actually function.
So this is the moment to ask: If you were building your firm today, how would you design it
for this market?
The following trends will likely define 2026, and your firm will need to lean into these shifts
to gain a competitive advantage.
AI as Core Infrastructure
AI has moved from pilot programs to an essential part of many firms' operating core. Nearly 80% of legal professionals now use some form of AI in their daily work, according to Clio.[2] And, according to Thomson Reuters' 2025 "Future of Professionals Report," "80% of respondents believe AI will have a high or transformational impact on their work within the next five years."[3]
Firms are already using it for document review, research, brief writing, and compliance, and increasingly for workflow management and billing.
The gains are undeniable: faster output and fewer repetitive tasks. But the tension is obvious, too. Productivity jumps are colliding with legacy pricing models that still reward hours instead of outcomes. Meanwhile, legal tech vendors are racing to build AI-native Shireen Hilal platforms that both support and compete with law firms.
Here's how firms can navigate this trend.
Treat AI as infrastructure, not experimentation.
Move ownership from innovation teams into core operations, the same way firms now manage conflicts or cybersecurity. Build cross-functional oversight — IT, risk and the general counsel's office — charged with model validation, confidentiality oversight and vendor vetting.
Train for judgment.
Good governance can't be buried in firmwide memos; you'll need to train and supervise staff on how to use your tools. Show — don't just tell — lawyers and staff how to evaluate, validate and refine AI outputs so that the technology amplifies expertise rather than automating mediocrity.
Productize the gains.
Convert internal efficiencies into new offerings: due diligence summaries, contract risk dashboards or AI-assisted investigations. And, importantly, price them as deliverables, not as time.
Fix the pricing model.
Plenty has been written about the death of the billable hour, so suffice it to say that efficiency without pricing reform is self-defeating. Shift to value-based or outcome-anchored fees that reflect client impact, or see your hours dwindle.
To make AI work for you, operate with real discipline so you can turn automation into your advantage instead of lost revenue and reputation.
Client Pressure on Fees and Delivery Models
Clients have been asking for more value for years, and now they're enforcing it. Budgets are tighter, panels are shrinking, and staffing decisions are being scrutinized line by line.
The numbers show how sharp the shift is: According to a 2025 BigHand report, "Navigating the Million Dollar Problem," 97% of firms report higher client attrition driven by budget cuts and panel consolidation.[4] And the Association of Corporate Counsel's 2025 "Chief Legal Officers Survey" found that 41% of legal departments received cost-cutting mandates in the past year, 43% expect to send more work to outside counsel, and 35% cite operational efficiency as their top priority.[5] 2025 had the highest layoffs we have seen since we shut down for a global pandemic,[6] so it's doubtful that budgets will increase in the near future.
If you work for a smaller firm, don't dismiss this as a BigLaw problem; the middle market is catching on. The Association of Corporate Counsel's 2025 "Law Department Management Benchmarking Report" noted that midsize companies are building internal legal teams for the same reason their larger peers did: cost control and consistency.[7] The pressure is marketwide.
Let's discuss how firms can navigate this trend.
Bring more value.
Clients want advisers who understand their business, not just their matters. Host strategy sessions for key clients — invite the right partners, talk through the year ahead and identify risks early. It's a smarter way to cross-sell because it starts with them, not you.
Collaborate on budget.
Instead of sending a rate increase letter, hold a price alignment session with your biggest clients to forecast spend; define success metrics, e.g., return on investment per matter, cycle time, risk avoidance, etc.; and agree on outcome-based or shared-savings models.
Pass along savings.
Give clients access to existing technology investments or other tools that you already have at your fingertips — e.g., document automation, AI review tools or basic templates — without new costs so they can see your investment in the relationship.
Tailor, don't template.
Customize advice to the client's risk tolerance and business context. Eliminate redundant research and unnecessary caveats. Precision reads as care.
Allocate tasks wisely.
For your clients with internal resources, help them handle efficient and routine tasks internally so higher-value work stays with your team. In your own firm, reallocate routine work to paralegals or lower-cost centers, maintaining margin while helping clients manage optics.
Buyers are becoming more disciplined, and firms will need to match that with their own discipline in pricing and client experience.
Competition Increases as Traditional Lines Blur
Competitive advantage has shifted from headcount and footprint to right-sized teams, process rigor and smart technology utilization.
The numbers make the shift unmistakable. According to the 2025 "Alternative Legal Services Providers Report" by Thomson Reuters Institute, Georgetown University Law Center and the University of Oxford, "[M]ore than half (57%) of corporate law departments rely on ALSPs for a range of services, from flexible resourcing to eDiscovery and litigation support."[8]
At the same time, midsize firms are posting the strongest demand growth of any segment. Indeed, a 2025 Thomson Reuters report noted that they are "once again near the front of the pack in terms of demand growth among all segments of law firms."[9]
Large firms can't rely on scale as a differentiator, and midsize firms no longer need to apologize for their size. The hierarchy of the market is flattening fast.
How can larger firms navigate this trend?
Build an internal "ALSP layer."
You have the resources to create managed-service pods, contract-attorney units or offshore teams that handle repeatable work efficiently under your own brand, giving clients a lower-cost option without pushing the work outside the firm or diluting quality control.
Revisit your value narrative.
Articulate how your scale translates into reliability — data security, global coverage or multidisciplinary depth — not just headcount and a recognizable name.
Stop chasing low-margin work.
If price competition is eroding profitability, reposition instead of racing to the bottom. Focus on complex matters where scale, risk management and institutional depth actually matter.
How can boutique and midsize firms navigate this trend?
Punch above your weight.
Demand growth is already leaning in your favor. Use agility, responsiveness and partner access as differentiators, and create rules-based service standards for your firm that ensure the promise is realized.
Lead the conversation.
BigLaw is likely to continue to be conservative and unwilling to opine on emerging legal areas. This is where you can build a strong presence fast.
Turn constraints into discipline.
Treat leaner budgets and less bureaucracy as a way to force yourself to focus on a few big bets. Approve and fund new ideas in phases to learn and fail fast: test, measure and scale only what works, or pivot quickly.
How can all firms navigate this trend?
The pace of innovation is now too fast for any firm, regardless of size, to build everything in-house. Clients expect advisers who can connect the dots, and the smartest firms are curating the right partners — tech providers, ALSPs and niche specialists — so they can offer integrated solutions without stretching resource and capability.
Thoughtful collaboration lets firms stay ahead of client needs; avoid commoditization; and deliver broader, more strategic value than they can reasonably create alone.
Bottom line: Work will continue to move to those firms that bring clients more impact and value.
Talent Model Reconfiguration
Law is a people business, and getting the talent piece right is the cornerstone of any law firm strategy.
Competition is intensifying at every level. Lateral partner hiring is still strong, associate attrition is climbing and the cost of misfires keeps rising. The BigHand report cited above found that lawyer departures have worsened across senior levels, and 49% of firms saw little to negative return on investment from new nonequity partners — a sign that firms are overhiring and underintegrating.[10]
Yet many firms continue to underleverage their most expensive investment. Weak vetting, thin onboarding and outdated staffing models mean expensive hires never reach their potential, while existing teams burn out under uneven workloads and unclear expectations.
Sustainable growth now depends on fixing the full talent life cycle: who you bring in, how you integrate them and how you keep them.
So how can firms navigate this trend?
Optimize lateral partner performance and integration.
Vet beyond portability.
Evaluate books of business for scalability, not just portability. For litigation partners, assess long-term pipeline and referrals. For corporate partners, understand individual-origin work.
Test cross-sell synergies.
Before the offer stage, run a structured shadow pipeline exercise by anonymizing the candidate's top ten clients and pressure-testing cross-practice touchpoints with two or three internal partners to model out where work would — and would not — naturally flow inside your firm.
Clarify support needs early.
Align staffing, marketing resources and on-site expectations up-front to prevent misalignment and early attrition.
Run integration like a client engagement.
Use structured road maps with client introductions, synergy checkpoints and clear performance ownership.
Reassess resource needs.
Audit what partners actually need.
Survey partners on office presence, staffing ratios and required support, then realign staffing and hybrid policies accordingly.
Build cross-functional pods across key clients.
Organize partners, associates, project managers and allied professionals around a shared client or industry segment. This structure encourages mentorship, specialization and consistent client experience — key differentiators in a market where burnout happens too often.
Create culture through connection.
Own the conversation.
Use short surveys and open conversations — e.g., town halls and all-hands meetings — to surface themes and build trust.
Empower culture co-creation.
Involve associates and staff in shaping firm culture, from planning virtual and in-person events, to running internal continuing legal education and innovation initiatives.
Prioritize structured mentorship and recognition.
Replace loose "our door is always open" statements with assigned managers, defined office hours and frequent recognition.
Firms that focus on integration and engagement with the same rigor they apply to pricing and profitability will gain an advantage technology can't replicate: a connected, committed workforce that stays.
Conclusion: Progress, Not Preservation
When the ground moves beneath us, the natural instinct is to react defensively and wait for the market to stabilize. But these are structural shifts that are likely to reward firms willing to adapt, not ride it out.
Efficiency can expand margins if pricing evolves with it. Competition can deepen client relationships if firms double down on agility and trust. The talent crisis can become a retention advantage if culture and integration are treated as strategy, not a human resources "to do" item.
This industry, like many others, has never moved this fast, and opportunity will come less from holding the line, and more from drawing new ones.
If you have feedback or are identifying trends or challenges you'd like to see addressed next quarter, I'd love to hear from you.
Shireen Hilal is the CEO at Maior Strategic Consulting.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of their employer, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
[1] Law.com and Leopard Solutions. https://www.law.com/2025/07/09/midyear-update what-law-firm-partners-need-to-know-about-the-2025-lateral
market/?slreturn=20251216155014; https://www.leopardsolutions.com/q3-2025-legal jobs-report-targeted-hiring-on-the-rise/.
[2] Clio, "Everything You Need to Know About Artificial Intelligence in the Legal Industry," https://www.clio.com/guides/ai-legal-trends/; See also American Bar Association. Understanding the Legal AI Landscape: Trends and Tools. Law Technology Today. 2025. https://www.americanbar.org/groups/law_practice/resources/law-technology today/2025/understanding-the-legal-ai-landscape-trends-and-tools/.
[3] Thomson Reuters Legal. How AI Is Transforming the Legal Profession. 2025. https://legal.thomsonreuters.com/blog/how-ai-is-transforming-the-legal-profession/.
[4] BigHand. Legal Talent & Resourcing Report 2025.
2025 https://www2.bighand.com/Legal-Talent-Resourcing-Report-2025.
[5] FTI Consulting & Association of Corporate Counsel (ACC). 2025 Chief Legal Officers Survey. 2025. https://static2.ftitechnology.com/docs/2025+ACC+CLO+Survey+Report.pdf.
[6] CNBC. https://www.cnbc.com/2025/12/04/layoff-announcements-this-year-top-1point1- million-the-most-since-2020-when-pandemic-hit-challenger-says.html.
[7] Association of Corporate Counsel. 2025 Law Department Management Benchmarking Report. 2025. https://www.acc.com/sites/default/files/2025-
06/ACC_2025_Law_Department_Management_Benchmarking_Report.pdf.
[8] Thomson Reuters Institute. Alternative Legal Services Providers (ALSP) Report 2025. 2025. https://www.thomsonreuters.com/en-us/posts/wp
content/uploads/sites/20/2025/01/ALSP-Report-2025.pdf.
[9] Thomson Reuters Institute. Midsize Law Firms Report 2025.
2025. https://www.thomsonreuters.com/en-us/posts/wp
